TOP IDEAS: New takeover offer for Radiant Communications Corp. (TSXV: RCN) returns a 180% gain for small cap value investors - Investorfile target reached.
Note: Investorfile's share price accumulation target of $1.10 for Radiant Communications Corp. was reached on May 8, 2013. For the record, we do not revise share price targets for our Top Ideas – Small Cap Value Stocks. We have positioned our blog to be one of the first providers for a pragmatic perspective of a small cap company stock's potential worth, where there may be uncovered value that has been largely overlooked by the investment community.
It was about one year ago when we first recognized the undeniable value of buying shares in Radiant Communications Corp. (TSXV: RCN -$1.41), a leading provider of managed network and cloud hosting solutions for medium-size enterprises. The stock price then was $0.51 (See: Radiant Communications Corp. shines value for small cap investors).
Last year was a turnaround period for Radiant Communications. In 2012 the Company generated $3.8 million of cash from operations on revenues of $32.7 million, produced $2 million of EBITDA and $0.03 per share in earnings. At year end, Radiant held $6.9 million in cash with no debt. The trend of good results continued into 2013.
But the good turned ugly in March of this year when the Company's Board accepted an offer from two of Radiant's controlling shareholders to take the Company private for $0.85 per share. This was a sweetheart deal for the controlling shareholders and injustice to minority shareholders. In particular it was an embarrassment for Radiant's chairman who since has resigned from the Board.
We wrote a blog post about the unfair offer (See: Radiant Communications shares are a steal -Too bad they are getting stolen) and shortly thereafter, the Financial Post followed our lead and published several stories about the inequality of Radiant's privatization process. With the help of the business media's scrutiny (and presence of a potential higher bidder) the insider deal was terminated.
Last week our efforts to help right the wrong for the minority shareholders of Radiant Communications were rewarded when the Company's board accepted (subject to shareholder approval) a new offer for Radiant shares at $1.43 – 68% higher and for valuation which seems fair in our opinion. The new offer returns a 180% gain (assuming no counter offers emerge that are higher) for small cap value investors who purchased shares of Radiant Communications since we first posted the stock to the list of Investorfile Top Ideas.
For minority shareholders of Radiant Communications: Justice has been served.
The Company has 15.1 million shares outstanding.
Radiant Communications website: www.radiant.net
Author Ownership Disclosure: TSXV: RCN - Long
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The author of this article has acquired and may trade shares of Radiant Communications Corp. through open market transactions and for investment purposes only.